13 - Financial neutral expert (CPA, CBV), Simone Brunton
Do you have a family business or an otherwise complex financial situation? A neutral financial expert can be extremely helpful for bringing clarity to the financial situation and financial options available to separating couples.
In this episode, I interview Simone Brunton, a Chartered Professional Accountant (CPA, CA) and Chartered Business Valuator (CBV). She is a Director in the Transactions group in the Kelowna office of Grant Thornton LLP. Simone specialize in business valuation and litigation support related to matrimonial and other shareholder disputes. She is the Chair of the Executive of the Okanagan Collaborative Family Law Group and has been a member of the group since 2008. Simone also practices in the area of mergers and acquisitions, assisting clients with buying and selling businesses in a variety of different industries.
Your host, Christina Vinters, is a nationally designated Chartered Mediator on a mission to inspire and facilitate healthy family transitions. She is also a gratefully non-practicing Lawyer, Author of Pathways to Amicable Divorce and the DIY Divorce Manual, and Peacemaking Business Consultant.
Work Email: Simone.Brunton@ca.gt.com
Work Phone: 250-712-6802
Modern Separations Links:
Christina: Today I'm talking to Simone Brunton. Simone is a Chartered Professional Accountant and Chartered Business Valuator at Grant Thornton. She's also the chair of the Okanagan Collaborative Family Law Group. Simone works with divorcing couples in the capacity of a financial neutral. In this interview, she shares the various ways in which a financial neutral can be helpful during the separation process, including text planning, business valuation, budgeting, and division of assets and debts. You can choose to involve a financial neutral regardless of the type of legal process you're going through, and I personally have found them to be very, very useful. Alright, here we go!
Christina: Hi Simone! Welcome! I'm happy to be talking with you today.
Simone: Hi! Thanks for having me.
Christina: So why don't we get started by having you tell us a little bit about your self and how you got into specializing and work with divorcing couples.
Simone: Okay, I'm a Chartered Accountant and Chartered Business Valuator. And I moved to Kelowna almost ten years ago and joined Grant Thornton here. And shortly after that I joined the Okanagan Collaborative Family Law Group, which is based out of Kelowna. So as a Chartered Business Valuator, one of the areas that we help couples going through divorce or separation with is when a business is involved. We are able to provide an independent, fair market value of the business, which can help the couple when they're looking to divide or separate their assets. This is very important because business valuation is a very complex area. It's difficult to know just by looking at the financial statements, how much the business is worth, and we find it's especially important in matrimonial situations. Because often, one spouse has much more knowledge of the business than the other, who's maybe not involved in the business. And so part of my role is to come up with an independent valuation of the business that is fair to both parties, and then helps them feel comfortable with making that decision and moving forward.
Christina: Yeah, that's really great that neutral aspect of your work... So the two of them would hire you together as a trusted person to help them sort out the valuation issue. Are there other types of financial issues that you can also help with during the separation?
Simone: Yeah, absolutely! Business valuation's one of them. Financial neutrals can often be involved in tax issues and helping structure things from a tax perspective. Like I mentioned, we often help with just educating both the parties to level playing field. We can also help with the division of assets. So further actually helping them sit down with the spreadsheets and split things out, as well as budgeting and forecasting, and things like that that they might need help with.
Christina: OK. And do you only work through the collaborative process or would you also be involved, for example, in a mediated file, or if couples are just negotiating between lawyers but it's not a formal collaborative process?
Simone: Yeah, absolutely. We do work in a collaborative process, and we do the same sorts of things outside of the collaborative process as well all the time.
Christina: So, a lot of families are concerned about the costs and they're worried about bringing on more professionals than necessary. What was your take on that? And do you find it, involving a financial neutral, can actually expedite things?
Simone: Yeah so, our role is to help them get to a resolution quicker. You know, if you don't have a financial neutral involved, you might spend more time arguing with things through your lawyers, and things like that which can really add up on the cost. You know, our report can be expensive to produce but it really helps the couples kinda make the decision and move on with that part of the process. The other way I feel like sometimes to look at it as that, you know, you can have two lawyers charging out at a certain rate versus one financial neutral charging out at a certain rate. So right there it's gonna be a bit more cost-effective. And also, you know, the financial neutral is specifically trained in these types of areas and they're gonna be more efficient in working through it, where as the lawyers, you know this is not their area of expertise. So you're kind of asking them to come up with that stuff and they're not gonna be as efficient getting through it. And the final way where we tend to... for some couples, can make a big difference is the tax structuring that could happen. Can save the couple a lot in taxes which can more than pay for the cost of that work or the cost of the valuation work.
Christina: So I just wanted to go back to what you were saying before about working with a couple where maybe, one person has been involved in the business and is maybe more financially sophisticated than the other. And you've got one person who's just really not comfortable or familiar with the finances. In those types of situations, do you work with both people together? But also, how do you bridge that gap? What are the results that you find working with those couples?
Simone: Yeah, often I'm having separate discussions with the couples. I just find that they're getting a chance to really be heard in a neutral environment and they're getting a chance to ask any question they want and not feel you know, like it's a dumb question. So generally we're usually dealing separately with them. It also allows the couples to bring up anything that they want to bring to my attention, going through the process as well. It really depends on the complexity of the situation and the person involved, but basically, yeah. We can spend a lot of time going through the valuation report with the one party and getting them more comfortable with it or allowing them to ask questions and get them more comfortable so that they do really understand what it is they're agreeing to. And I find that that's really, really important and it's important to do it sort of separately. We might meet with them together as well, but often in that kind of case, there's a lot of individual meetings.
Christina: Yeah, and I've personally seen a lot of success with involving a financial neutral in my mediations. I've seen that somebody who was very wary and not comfortable with the opinion of the other party is a regular business accountant. By hiring the financial neutral they really got a sense of ease, and comfort that they are getting an opinion that they could really rely on that was fair and wasn't skewed in favor of the other person. So, I'm really in favor of bringing financial neutrals on whenever possible. What would you suggest the people should know ahead of time that they should get organized or know upfront before getting started?
Simone: Before getting started, we're gonna require a lot of information. So maybe you know, doing a bit of gathering that information, whether it's your accountant has it or if you have copies or whatever sort of financial statements, tax returns – that kind of information we're gonna need that to get started. Pretty much you know, we like to kinda take a quick look at that before we get too deep into it because help it can help us scope out the engagement and kind of let the parties know what the cost might be upfront, or at least a quote. And it can also determine what type of report we would need to do, or what type of work we'd need to be done. That's really important to sort of get that information to us off the bat, we'll have a quick look at it and can kind of have a better idea at the scope of what we're looking at, how long it's gonna take, and all those sorts of things.
Christina: OK, and what kind of options are there for different levels of reporting?
Simone: So there's three levels of reports that a business valuator can provide. So one is a calculation level report, that's sort of the lowest level of report which is kinda like your Notice to Reader financial statement. And then we have the estimate level of report, and then the comprehensive report. Comprehensive reports are usually for very highly litigious high-dollar value situations. So depending on the size of the final amount of money at stake, that's usually where we see those. For most divorcing couples we would normally recommend estimate level reports. That report is able to be used in court if it needs to be. And you know, pretty thorough analysis of the company, what's going on. In the collaborative process because the parties are agreeing to not go to court. Sometimes you can prepare a calculation level report. In specific cases which is the less robust report and a little more cost-effective. But again, only under that process since there is an agreement not to go to court because that type of report is not appropriate for court because less work is done.
Christina: OK. If people are trying to figure out whether or not it's a good idea to go ahead and get a business valuation in their case, is there some kind of benchmark that you would use, for example a certain level of revenue or a certain level of profit, I don't... I'm not sure how you look at that, to say yes in your case I think it would be worthwhile to go ahead and get this done?
Simone: Well, I would say whenever there's a business involved, you should at least talk to a business valuator. You can't really set it based on the revenue or profit because there's so many different expenses and things that can go through that and impact the value of the business overall. But definitely, if there's a business involved, it's a good idea to get a business valuator involved. Now, you know, we're gonna be upfront at what I was saying before about getting the information upfront and kinda high-level look, so you know, if I get it and it's clear that value's going to be zero, we'll have that discussion upfront with the parties and whether they want us to go through the business valuation, we can definitely scope it out for them. But it's definitely worth at least having us take a look at it. And then other times get involved even there's no business would be there's complex tax structures. But usually those are related to businesses, or there's this really high-dollar value net worth of individuals and again, what we're talking about before if one party's been really involved in the finances, and the other has no involvement, we can help with that education piece as well.
Christina: Do you get involved with helping with budgeting at all? Some couples I know, one person is in charge of most of the finances and the other person, unfortunately, may not have an any experience with budgeting or really have a handle on what day to day life costs. So is that something that you help with?
Simone: Certainly in the collaborative process, that's part of the financial neutral's role if the couple needs it. So certainly, we can get involved in that and forecasting and things like that.
Christina: OK, awesome! So is there anything else that you'd like people to know about who might be wondering whether financial neutral will be helpful in their case? Any advice that you have for them?
Simone: Yeah, I think that besides the stuff we've already talked about, you know having a financial neutral, and I think we have sort of touched on this earlier. Really allows for fair settlement for both parties, and I think makes both parties feel more comfortable that they're getting a fair settlement. You know, because you got that independent expert that's providing the answers rather than friends who are biased and not experts on those areas, or lawyers who aren't really experts on those areas either. So I think I can give couples a lot of comfort that they've done the right thing and they know that they're having a fair, independent opinion.
Christina: OK, fantastic! And what are the best ways for our listeners to get in touch with you if they would like to seek out some help?
Simone: So probably by phone or email. My phone number's 250-7126802, and my email is firstname.lastname@example.org. And there's probably some information on me also available on the Grant Thornton website, which would be www.grantthornton.ca. Or www.collaborativefamilylaw.ca.
Christina: OK great! Lots of options. We'll have all of those links at the show notes as well. Awesome! That was really, really helpful information, Simone. Thank you so much for spending time with me today.
Simone: Thank you for arranging it. That was great!